One of the difficulties with cost-plus pricing involves
A) establishing the rate of return.
B) the administrative costs of deciding which of the firm's costs should be included.
C) estimating the firm's marginal cost.
D) separating the firm's fixed and variable costs.
E) estimating the price elasticity of demand.

Question

Quizplus · Accepted Answer

Cost-plus pricing involves including all of the firm's costs in determining the price of the product or service. This includes not only variable costs (such as materials and labor), but also fixed costs (such as rent and overhead). The difficulty with cost-plus pricing is therefore determining which costs should be included, which can be administratively complex and time-consuming.

One of the Difficulties with Cost-Plus Pricing Involves